1/4 homes won't be able to afford their energy bills after price cap increase
Citizen's Advice warn 13m people will struggle to heat their homes this winter
Last updated 26th Aug 2022
Around 13 million people in the UK will be struggling to pay their energy bills this winter, as Ofgem announces an 80% increase in the energy price cap.
The announcement from the energy regulator will see bills skyrocket to £3549 a year from October 1st.
And there are warnings prices will top £4000 in the new year, as the cost of living crisis continues.
Earlier this year families were paying closer to £1200 a year for their gas and electric bills.
One in four won't be able to pay - Citizen's Advice
Citizen's Advice is warning unless the government puts a new plan in place quickly, around one in four families won't be able to pay their bills this winter.
And in a stark warning, that number could rise to one in three if January's predicted price-rise is as high as anticipated.
Principal Policy Manager at Citizen's Advice Rachel Beddow told us: "Already, daily, we're seeing people having to make the choice between giving the kids a hot bath or giving the kids food, and we think this is going to get so much worse in winter, which is why we need a proper plan in place to get people to the support they're going to need."
Rachel told us about some of the heartbreaking stories Citizen's Advice staff have been told by people calling for help:
"One older lady is now unable to use her stairlift because she is terrified of being able to afford the electricity costs, so she's facing a choice of living upstairs, because that's near the bathroom, and living downstairs because that's near the kitchen."
Cries for help currently "beyond that of the pandemic"
Rachel continued: "It's important to say the size and scale of the crisis we're seeing right now is beyond what we saw in the middle of the pandemic.
"We are seeing numbers currently we would expect in the middle of winter in the middle of summer.
"We helped more people in July who were unable to top-up their pre-payment meter than we did in January."
Energy companies obligated to support customers
And she has this advice if the new price cap makes bills unaffordable for you:
"We’d always encourage people as a first port of call to contact their energy supplier because they have to help you come to a solution.
"Try to negotiate a deal that works for both of you, whether that’s reducing your payments in line with what you can afford or finding a way to pay off any debts you’ve built up.
"If you do that and you feel you need additional support contact an organisation like Citizen's Advice and we can help you."
Cost of Living crisis continues
Before Boris Johnson announced he was stepping down, the government announced a new support package for families.
This included £400 off every bill, and further support for pensioners and people on benefits.
The government says there will be no new major policy announcements about the cost of living crisis until a new Prime Minister is announced on September 5th.
You can find out what support you might be able to claim on the government website
Interest rates and inflation go up
Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.
Energy bills
The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to £3,549 for an average home in October but a price freeze from the government restricted the typical bill to £2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.
Food prices
The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.
Prices at the pumps
The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.
Average cost of filling up a car with petrol hits £100
On 9th June 2022, the average cost of filling up a car with petrol hit £100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.